PPSC Economics Chapter 6 Economics Model With Answers

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PPSC Economics Chapter 6 Economics Model

Sr. # Questions Answers Choice
1 For a given positively sloped supply curve the price increase to consumers resulting from a specific tax imposed on sellers will be. Greater the more price elastic demand is Greater the less price elastic demand is Equal to the entire tax when demand is perfectly elastic Equal to half of the tax whenever demand is unit elastic
2 A Horizontal demand curve for a good could arise because consumers. Are irrational Are not sensitive to price changes View this good as identical to another good Have no equivalent substitutes for this good
3 If the price of automobiles were to increase substantially the demand curve for gasoline would most likely Shift leftward Shift right ward Become flatter Become steeper
4 A specific tax on sellers will shift the demand curve to the right Shift the demand curve the left Shift the supply curve to the right Shift the supply curve to the left
5 If the price of orange juice rises 10% and as a result the quantity demanded falls by 8% the price elastic of demand for orange juice is. -1.25 Inelastic Both a and b Neither A nor B above
6 The percentage change in the quantity demanded in response to a percentage change in the price is known as the. slope of the demand curve Excess demand Price elasticity of demand All of the above
7 A vertical demand curve for a particular good implies that consumers are. Sensitive to changes in the price of that good Not sensitive to changes in the price of that good. Irrational Not interested in that good
8 A vertical demand curve results in. No change in quantity when the supply curve shifts. No change in price when the supply curve shifts No change in the supply curve being possible No change in quantity when the demand curve shifts.
9 If the demand curve for a good is horizontal and the price is positive then a leftward shift of the supply curve results in. a price of zero An increase in price A decrease in price No change in price
10 Consumers and firms are known as price takers only it No market exists to determine the equilibrium price they can set the market price They cannot effect the market price Excess demand exists
11 It is appropriate to use the supply and demand model if in a market. Everyone is a price taker with full information about the price and quantity of the good. Firms sell identical products Costs of trading are low All of the above
12 In the labor market if the government imposes a minimum wage that is below the equilibrium wage then. Workers who wish to work at the minimum wage will have a difficult time finding jobs. Firms will hire fewer workers than without the minimum wage law. Some workers may lose their jobs as a result Nothing will happen to the wage rate or employment
13 If a government imposed price celling causes the observed price in a market to be below the equilibrium price. There will be excess demand There will be excess supply The curves will shift to make a new equilibrium at the regulated price None of the above
14 When two goods are substitutes a shock that raises the price of one good causes the price of the other goods to. Remain unchanged Decrease Increase Change in an unpredictable manner
15 A competitive equilibrium is described by A price only A quantity only The excess supply minus the exceess demand. A price and a quantity
16 If price is initially above the equilibrium level. the supply curve will shift rightward The supply curve will shift letward Excess supply exists All firms can sell as much as they want
17 Equilibrium is defined as a situation in which. Neither buyers nor sellers want to change their behavior No government regulations exist Demand curves are perfectly horizontal suppliers will supply and amount that buyers wish to buy
18 The expression increase in quantity supplied is illustrated graphically as a. Leftward shift in the supply curve Rightward shift in the supply curve Movement up long the supply curve Movement down along the supply curve
19 Suppose the demand curve for a good shifts rightward, causing the equilibrium price to increase this increase in the price of the good results in. A rightward shift of the supply curve An increase in quantity supplied A leftward shift of the supply curve A leftward movement along the supply curve
20 To determine the total demand for all consumers sum the quantity each consumer demands. At a given price At all prices and then sum this amount across all consumers Both a and b will generate the same total demand None of the above
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